Karen Imber, a 68-year-old pensioner, was ordered by the High Court to return the £225,000 compensation Thames Water paid her after it discovered she had sold the same Woodford Green, Essex, house for £780,000 in August 2023.
Imber claimed her property became "unsaleable" after sewage floods in 2006, 2007 and again in 2014, and settled a six-figure claim with Thames Water on 6 September 2023.
During mediation she said she was "trapped" in the house and that no buyer would be willing to purchase it because of the flooding history, adding that her loss included the house value plus £144,000 for insurance and damages.
Thames Water later learned that Imber had accepted an offer of £780,000, exchanged contracts on 2 August and completed the sale on 3 August 2023 - a month before the settlement was agreed.
The judge noted the sale price was about £37,000 below the expert's market valuation that assumed no flooding, and concluded Imber's claim of unsaleability was no longer true.
Deputy Master Alexandra Marzec described the conduct as "plainly dishonest" and ruled that Imber must repay the £225,000 and may face further damages after a separate hearing.
Thames Water's lawyers argued that Imber's statement of unsaleability was a continuing representation that became false once the house was sold, and that she had a duty to disclose the offer.
Imber defended herself by saying she had told the mediator about the offer and believed Thames Water was aware, asserting no further obligation to inform the water company.
Marzec emphasized that Imber knew the property was sold by 3 August 2023, undermining the factual basis of her claim and rendering the settlement void.
If Thames Water decides to pursue additional damages, the amount will be determined at a future hearing.
